In the latest rally, Bitcoin did manage to attain a higher high and at least make a start at reversing a bearish trend that has been in force since April of this year. However, the reverse does look to be losing momentum, and a negative divergence on the daily chart could very possibly bring Bitcoin back to the support level around $30,000.
Chief analyst Dave Keller of Stockcharts.com spoke to Business insider recently on his view that the strong recovery rally seen by Bitcoin over the last couple of weeks is probably due to retrace back down to previous strong support at $30,000.
"I'm concerned about the fact that when it's bounced a number of times, it's really been unable to get above $42,000, and I think it's sort of hit this stable period. I wouldn't be surprised if we test the lower end of that range. I still see bitcoin overall as fairly distributive, and I would expect us to come back to that $30,000 level."
One of the other principal reasons for Keller’s view is the negative divergence in momentum displayed by the RSI. This shows that as bitcoin price rose to over $60,000 earlier this year, the trading momentum continued to decrease, a sign of weakness.
However, he does add that if the RSI goes back up and remains over 70 then that is a good sign.
Generally, over the longer term, the analyst is bullish. He thinks that the historical price swings of Bitcoin predict more upside to come, and he expects Bitcoin to surge above $100,000, but doesn’t give a time frame.
"If you think of the chart and you think of the trajectory of what has normally happened during the bull phases and normally happened during the pullbacks, the run that we had is not unreasonable, the pullback we had is unreasonable, and if you had a similar run to the upside off of $30,000, three times that gets you to $90,000. I think three-to-four times would be similar to the previous rallies that you've had after corrective patterns, so that puts you to around $100,000."
Keller does add that if a higher low forms around the $35,000 price level, then a break back above $42,000 is on the cards.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.